Another Scam? GXChain Offices Raided, Executives Arrested

GXChain a well-known crypto company was raided by Chinese police in Hangzhou city on September 11th, with the reasoning not yet disclosed by local authorities.

The prominent news outlet, Jinse requested information from the police but further details were not forthcoming, only confirming that the investigation was opened and arrests of executives were made at the GX Chain office. The confirmation of the validity of the initial reporting from the police also explained why many of the GXChain staff were uncontactable.

The news of the alleged nefarious act may come as a surprise to many. The company was one of the first to hold an initial coin offering (ICO) in 2017 and was said to be a legitimate group, unlike many who had gone down this funding route.

Since the ICO, GXChian had been successful. They reached a market cap of over $600 million USD and although times had been less favorable in recent times, their cap had only gone down to $48 million.

Yet, this figure is set to drop even further if their price is anything to go by. Following the news of the arrest, their already falling price took a steep drop of nearly 20%. The price was at a high point of $1.50 in early August but now it sits at $0.56.

Why have police hit GXChain?

Until the police or GXChain reveal any further details, it is not yet known what prompted the crackdown by authorities. There is, of course, a deep history of ICO scams in China as the recent Plus Token scam proved. But why would they target a seemingly legitimate and previously popular company?

Primitive Crypto’s Dovey Wan gave her two cents on the matter in a post via Twitter. The Chinee analyst claimed it could be due to GXChain’s practices regarding personal credit data. She said:

“Tbh I have no idea why the police took action against GXchain instead of 10000 other Chinese scams, as GXchain has a real business behind. The trigger might be their data business- they sell processed personal credit data, which is a highly sensitive area now in China,”

Whatever the case may be, it is certainly not looking good for GXChain. The company may yet recover but until more is known about the situation, it is hard to tell.